Enterprise management incentives grow in popularity

Enterprise Management Incentives (EMI) offer growing businesses a tax-advantaged way to reward, motivate and retain key employees.

The April 2026 enterprise management incentive (EMI) reforms have pushed this perk towards mainstream acceptance. Higher qualifying limits mean that EMI tax-advantaged share options can now continue to be granted even as a company grows and matures.

EMIs help to retain and reward key people. They can be granted options at a price agreed at the outset, and which can be exercised at a set time or if a performance target is hit. The maximum market value of unexercised EMI share options that an employee can hold in a three-year period is £250,000.

Tax advantages

There is generally no tax charge when EMI share options are granted to an employee or when options are exercised. A capital gains tax liability can arise when the shares are sold, but the gain will potentially qualify for a flat rate of 18%.

Qualifying limits

The following limits apply to EMI contracts granted since 6 April 2026:

• The maximum market value of unexercised EMI options granted by a company cannot exceed £6 million (previously £3 million).
• Gross assets must be less than £120 million, with fewer than 500 full-time equivalent employees (previously £30 million and 250 employees).
• The maximum exercise period for EMI options is 15 years (previously 10 years).

Companies can retrospectively apply the 15-year exercise period to EMI share option contracts previously granted.

• Companies which have not previously qualified for EMI should review whether they now qualify, and whether EMI options are the right choice for future employee equity incentives.
• Similar considerations apply if a company has previously qualified, but then exceeded the gross assets or employee limits as the company has grown; or the company has hit the old £3 million limit for unexercised EMI options.
• Companies with existing EMI options should decide whether they want to extend the exercise period to 15 years.

Details on EMIs (along with other employee share schemes) can be found here.

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